Economics Questions and Answers Multiple Choice for UPSC, SSC CGL

Economics Questions and Answers- Important questions of Economics a set of 60 questions with solution is given below. These all questions are asked in UGC NET JRF Exam 2018 held on 8th July, 2018. Since the most questions asked in the previous years are asked in the successive years again in different exams. Therefore, the study of these questions is the most necessary. All these questions are being given in the form of Economics notes with one liner answer.

1. Which of the following will be true for both monopoly and monopolistic competition in the short run?
(A) Price is greater than marginal revenue (B) Price is equal to marginal revenue
(C) Price is equal to marginal cost (D) Price is equal to average cost

2. When the marginal cost is equal to average cost, the slope of the average cost is :
(A) positive (B) negative (C) zero (D) infinite

3. For the function Q = A . Kα . Lβ, which of the following is correct?
(A) The degree of homogeneity is 1
(B) Elasticity of substitution is equal to α + β
(C) Output elasticity with respect to capital is a
(D) Marginal product of a factor = Average product of the factor

4. When an information asymmetry is observed after an agreement is obtained between individuals, it is called :
(A) Signalling (B) Moral hazard (C) None of the above (D) Both (A) and (B) above

5. Which amongst the following is a correct description of inverse demand function?
(A) p = f(D) (B) D = f(p) (C) D = f(1/p) (D) p = f(D, 1/y)
Where p = price, D = demand and y = income.

6. The first fundamental Theorem of Welfare Economics requires :
(A) That there be an efficient market for every commodity
(B) That the economy operates at some point on the utility possibility curve
(C) Producers and consumers to be price takers (D) All of the above

7. The Theory in which trade cycle is generated due to excess of actual over the desired investment has been given by who amongst the following?
(A) R. G. Hawtry (B) F. Hayek (C) P. Samuelson (D) J. Schumpeter

8. 'Menu costs' in relation to inflation refer to :
(A) Cost of revaluing currency (B) Cost of altering price lists
(C) Cost of the maintenance of monetary base
(D) Cost of finding better rates of return

9. According to M. Friedman, Quantity Theory of Money is the theory of :
(A) Value of money (B) Price determination
(C) Nominal income (D) Demand for money

10. Gilt-edged market mean :
(A) Bullion market (B) Market of pure metals
(C) Market of government securities (D) Market of commodities

11. Which of the following is likely to be most inflationary in its impact?
(A) Repayment of public debt (B) Borrowings from the public to finance a budget deficit
(C) Borrowings from banks to finance a budget deficit (D) Creating new money to finance a budget deficit

12. "The absorption approach" of analyzing balance of payments was formulated by :
(A) M. Friedman (B) Marshall and Lerner
(C) Sydney Alexander
(D) Haberler

13. Prebisch-singer hypothesis relates to :
(A) Balance of payments problem of developing countries
(B) Terms of trade of developing countries
(C) Prevalency of poverty among developing countries
(D) Inequality of income in developing countries

14. Which of the following statement about the India's balance of payments is not correct?
(A) If a foreign citizen deposits some money in a bank in India, the accounts regard this as a credit
(B) The current account balance shows only the balance for the trade in goods and services combined
(C) Allowing for errors and omissions, the accounts always balance
(D) If the country's reserves of foreign currencies increase then there is a minus sign for this entry

15. Let elasticity of demand for exports for a certain country be ex and elasticity of demand for imports be em. Assume that the country devalues its currency. Its balance of payments was almost certainly show an improvement if :
(A) ex + em > 1 (B) ex + em < 1
(C) ex + em = 1 (D) ex = em = 1

16. Which of the following would cause Rupee to depreciate against u.s. Dollar, other thing being equal?
(A) A rise in interest rates in India (B) A fall in incomes in U.S.A
(C) An expected rise in the external value of rupee
(D) An increased flow of foreign investment into India

17. According to Mercantilists, trade is a :
(A) Positive sum game (B) Infinite sum game
(C) Zero sum game (D) Negative sum game

18. There is incomplete specialization in production when country faces :
(A) constant opportunity costs (B) decreasing opportunity costs
(C) increasing opportunity costs (D) indeterminate opportunity costs

19. Income tax is generally based on the principle of :
(A) Benefit received principle (B) Ability to pay principle
(C) Willingness to pay principle (D) None of the above

20. Which method can help in obtaining a welfare improvement if externalities exist?
(A) Regulation (B) Assigning property rights and permitting bargaining
(C) Pigovian taxes (D) All of the above

21. Which of the following is a capital receipts in the Government budget?
(A) Interest receipts on loans given by the Government to other parties
(B) Dividend and profit of public enterprises
(C) Borrowings of the government from the public
(D) Property tax receipts

22. Which amongst the following would be most effective in mitigating the effect of externalities?
(A) Fiscal policy (B) Regulation of monopoly
(C) Active monetary policy (D) Freeing the markets

23. Maximum social advantage is achieved when :
(A) Total Social Sacrifice = Total Social Benefits
(B) Marginal Social Sacrifice = Marginal Social Benefits
(C) Net Social Sacrifice = Net Social Benefits
(D) Average Social Sacrifice = Average Social Benefits

24. Statutory incidence of a tax deals with :
(A) the person(s) legally responsible for paying the tax
(B) the amount of revenue left over after taxes
(C) the amount of taxes paid after accounting for inflation
(D) the amount of tax revenue generated after a tax is levied

25. The relationship described by the Expectations-Augmented Phillips curve is correct in which of the following?
(A) Only in the long run (B) Only in the short run
(C) Both in the short run and in the long run (D) Neither in the short run nor in the long run

26. Non Accelerating Inflation Rate of Unemployment (NAIRU) means :
(A) a rate of unemployment for which the change in the rate of inflation is zero
(B) a rate of inflation which makes the rate of unemployment zero
(C) a rate of inflation for which the change in the rate of unemployment is zero
(D) a rate of unemployment which is equal to the rate of inflation

27. New Keynesians use which of the following to explain price and wage stickyness ?
(A) Staggered labour contracts (B) Menu Costs
(C) Behaviour based on bounded rationality (D) All of the above

28. For the capitalist economy, the primary objective of the New Classical Economics is to explain which of the following?
(A) Business cycle phenomenon (B) Underemployment
(C) Wage-price rigidity (D) Effectiveness of Government policy

29. Which of the following growth model(s) assume(s) Neutral Technical Progress?
(A) Harrod model (B) Solow model
(C) Both (A) and (B) (D) Neither (A) and (B)

30. In an economy, the GDP deflator is found to be 110 for the current year. If the GDP has registered an annual growth rate of 15 per cent in the same year, then, the rate of growths of real GDP will be :
(A) 5% (B) 1.5%
(C) 25% (D) 2.5%

31. What is the nature of equilibrium in the IS-LM model?
(A) Stock equilibrium (B) Flow equilibrium (C) Stock and flow equilibrium (D) Oscillating equilibrium

32. If marginal propensity to import is 0.1 and the marginal propensity to consume is 0.7, the value of the income multiplier will be :
(A) 1.25 (B) 2.33
(C) 2.5 (D) 3.33

33. According to neo-classical theory of distribution, constancy in the wage share in national income would come about only when the elasticity of factor substitution :
(A) is less than one (B) is equal to one
(C) is zero (D) is greater than one

34. Which amongst the following is not a feature of J.E. Meade's model?
(A) Perfect competition prevails (B) Economy produces consumptiongoods and producer goods
(C) Perfect substitution is possible between consumption and capital goods
(D) It examines the relationship between the growth rate of population and growth rate of savings

35. Simplex method of solving Linear Programming problems was developed by :
(A) Koopmans (B) Dantzig (C) Leontief (D) Solow

36. Which of the following is not a correct feature for the absolute convergence to hold good?
(A) Same population growth rate (B) Same savings propensity
(C) Same capital-labour ratio (D) Different capital-labour ratio

37. In Solow's growth model, the output per capita is a function of :
(A) Labour-Output ratio (B) Capital-Output ratio
(C) Technical progress (D) Capital-Labour ratio

38. Dusenberry was of the opinion that less developed countries will have serious and adverse effect on their balance of payments due to :
(A) Demonstration effect (B) Multiplier effect
(C) Backwash effect (D) Spread effect

39. Leibenstein in his critical minimum effort thesis treats population as a factor that is :
(A) Income-genera ting (B) Investment-inducing
(C) Income-depressing (D) Market-expanding

40. 'Workers must own the capital to which their savings has given rise'. This is an important assumption of the growth model, developed by :
(A) L. Pasinetti (B) N. Kaldor
(C) R. Solow (D) J.E. Meade

41. Which one of the following is true for demand side vicious circle of poverty ?
(A) Low income – Low demand – Low investment – Capital deficiency – Low productivity – Low income
(B) Low productivity – Low income – Low savings – Low investment – Capital deficiency
(C) Low income – Low investment – Low demand – Low Capital deficiency
(D) Low demand – Low saving – Low productivity – Low investment – Capital deficiency

42. A bag contains 5 red, 7 white and 3 green balls. One ball is randomly drawn from the bag. What is the probability that it is green?
(A) 12/15 (B) 1/5 (C) 7/15 (D) 1/3

43. Which one of the following committees recommended to establish the National Bank for Agriculture and Rural Development (NBARD) in India?
(A) Narsimham Committee (B) Chakravarti Committee (C) Abhijit Sen Committee (D) Shivaraman Committee

44. Which of the following option(s) is/ are true for National Action Plan for Climate Change?
(A) It was launched in 2008 (B) It has 8 vertical missions for pollution control
(C) Both (A) and (B) are true (D) Neither (A) nor (B) is true

45. Which of the following is portrayed in the population pyramid of a country ?
(A) Rural-urban distribution of population (B) Young-old distribution of population
(C) Age and sex distribution of opulation (D) Gender distribution of population

46. In the long period, which one of the following curves would aptly represent the time path of population for a developing economy?
(A) Exponential Curve (B) Logistic Curve
(C) Lorenz Curve (D) Hyperbolic Curve

47. Identify the correct statement about the relationship between total fertility rate and gross reproduction rate :
(D) All of these

48. If in a distribution mean is 40, mode is 60 and the standard deviation is 10, then the coefficient of skewness will be :
(A) – 2 (B) 2 (C) – 20 (D) 5

49. Which of the following is not a scheme for the upliftment of women in India?
(A) Beti Bachao, Beti-Padhao (B) Sukanya Samridhi Yojana
(C) Gender Budgeting (D) UJALA scheme

50. In the context of doubling of farmers income objective, which of the following is not correct?
(A) The target year is 2022-23. (B) It is real income which is to be doubled
(C) Income from cultivation alone is to be doubled (D) Diversification of agriculture is to be promoted to ahieve this objective

51. If a sample survey of the same 100 households is conducted in a particular village, annually for five years, the data so collected will be described as :
(A) Time Series Data (B) Cross-section Data
(C) Panel Data
(D) Pooled Time Series and Cross-section Data

54. As on 31st, March, 2017 external debt of India was in which of the following range as a percentage of GDP?
(A) 14 to 16 per cent (B) 16 to 18 per cent
(C) 18 to 20 per cent (D) 20 to 22 per cent

55. Market failure can occur because of :
(A) Imperfect competition (B) Externalities
(C) Both (A) and (B)  (D) Neither (A) nor (B)

56. Capital gains means :
(A) An increase in the value of an asset (B) An increase in the stock of capital
(C) An increase in the yield of an asset (D) An increase in the amount of foreign capital

57. Palma ratio is a measure of :
(A) Inequality of income (B) Stock market volatility (C) Morbidity in a region (D) Volatility of crop prices

58. Given the Demand function of a consumer D = 10 – 2p, the consumer's surplus at price = 2 is :
(A) 2 (B) 10 (C) 9 (D) 15

59. Total cost function of a producer is C = 10 + 5Q + 2Q2. If price is 15, what is marginal cost of the producer in equilibrium ?
(A) 10 (B) 5 (C) 15 (D) 4

60. Which of the following is not correctly matched for Union Budget 2018-19, announced on 01.02.2018 ?
(As % GDP)
(A) Fiscal Deficit –  3.5 (B) Revenue Deficit – 2.2
(C) Primary Deficit – 1.2 (D) Effective Revenue Deficit – 0.3